The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: CS/SB 1016
INTRODUCER: Banking and Insurance Committee and Senator Burgess
SUBJECT: Mortgage Payoff Letters
DATE: February 10, 2022
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Schrader Knudson BI Fav/CS
2. JU
3. RC
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
SB 1016, makes significant revisions to Florida law regarding estoppel letters provided by
mortgagees and mortgage servicers under ch. 701, Florida Statutes (F.S.). Specifically, SB 1016:
Reduces from 14 days to 10 days the timeframe during which a mortgagee or
mortgage servicer must respond to an estoppel letter request.
Allows mortgagees and mortgage servicers to send corrected estoppel letters which
supersede previous letters, subject to specified conditions.
Prohibits a mortgagee or mortgage servicer from qualifying, reserving the right to
change, or conditioning or disclaiming the reliance of others on a current, valid
estoppel letter.
Prohibits a mortgagee or mortgage servicer from refusing to accept funds received
that conform with the amount provided in a current, valid estoppel letter; and requires
the mortgagee or mortgage servicer to apply such funds to the balance of the loan.
Specifies that within 60 days after the mortgage loan has been paid pursuant to the
estoppel letter, the mortgagee or mortgage servicer must execute an instrument
acknowledging release of the mortgage; have the instrument acknowledged, or
proven, and send it or cause it to be sent for recording in the official records of the
proper county; and send or cause to be sent the recorded release to the mortgagor or
record title owner of the property. Also provides for attorney fees for prevailing
parties in civil actions relating to these requirements.
REVISED: BILL: CS/SB 1016 Page 2
Specifies that the release of a mortgage does not necessarily relieve the mortgagor, or
the mortgagor’s successors or assigns, from any personal liability on the loan or other
obligations previously secured by the mortgage.
Provides the requirements for making and responding to an estoppel letter request.
Standardizes the minimum contents of an estoppel letter.
Revises the definition of an estoppel letter.
Provides for retroactive application to existing mortgage contracts.
The effective date of the bill is October 1, 2022.
II. Present Situation:
Estoppel Letters
In general, an estoppel letter (or estoppel certificate) is a legal document that stops someone from
claiming different facts or terms regarding an agreement.
1
In regards to real estate, these types of
letters are typically used to confirm amounts of moneys owed that attach to a certain piece of
property, such as mortgage debt, condominium association fees, home owners association fees,
and outstanding claims or deposits due to tenants. These types of letters are often sought prior to
closing on a real estate transaction as part of due diligence to confirm proper amounts due that
can affect the settlement of said transaction.
In Florida, s. 701.04, F.S., provides the requirements for estoppel letters in regards to real estate
mortgages (these letters are also commonly known as mortgage payoff letters).
2
Section
701.04(1), F.S., requires that a mortgage lender (also known as the mortgagee) or mortgage
servicer deliver to the requestor, within 14 days after receipt of a written request, a mortgage
payoff letter setting forth the unpaid balance of the loan secured by the mortgage. The request
may be made by a mortgagor (the borrower under the mortgage), a record title owner of the
property, a fiduciary or trustee lawfully acting on behalf of a record title owner, or any other
person lawfully authorized to act on behalf of a mortgagor or record title owner of the property.
Section 701.04(2), F.S., requires that, upon the payment of the money due on a mortgage, the
mortgage lender or servicer must execute in writing an instrument acknowledging satisfaction of
the mortgage and have the instrument acknowledged, or proven, and duly entered in the official
records of the proper county.
3
Within 60 days after the date of receipt of the full payment of the
mortgage the person required to acknowledge satisfaction of the mortgage must send or cause to
be sent the recorded satisfaction to the person who has made the full payment. In the case of a
civil action arising out of these requirements, the prevailing party is entitled to attorney fees and
costs.
1
Estoppel Letter, CREPedia, https://www.crepedia.com/dictionary/definitions/estoppel-letter/ (last visited Feb. 4, 2022); and
What is an Estoppel Certificate, Redfin https://www.redfin.com/definition/estoppel-certificate (last visited Feb. 4, 2022).
2
Section 701.041, F.S., defines an estoppel letter in regards to mortgages as a statement of the amount of the unpaid balance
of a loan secured by a mortgage, including principal, interest, and any other charges properly due under or secured by the
mortgage; and the interest on a per-day basis for the unpaid balance.
3
Section 701.04(2), F.S., also applies to liens and judgments attached to a property. BILL: CS/SB 1016 Page 3
It is notable, that s. 701.04(2), F.S., requires the full payment of the mortgage, not the amount
that was specified in the estoppel letter provided pursuant to 701.04(1), F.S. This is in contrast
with homeowners’ association estoppel certificates in Florida where s. 701.04(s), F.S.,
specifically states that a homeowners’ association “waives the right to collect any moneys owed
in excess of the amounts specified in the estoppel certificate from any person who in good faith
relies upon the estoppel certificate and from the person’s successors and assigns.” Sections
718.116(8)(c), and 719.108(6)(c), F.S., provide similar language regarding estoppel certificates
for any unpaid condominium association assessments and unpaid rents, and assessments due to
cooperatives (i.e. co-ops), respectively.
4
A mortgagee is not necessarily held to the same waiver
of rights to collect additional moneys from a mortgagor upon the provision of an estoppel letter
as s. 701.04, F.S., does not provide a similar waiver provision as seen for homeowners’
associations, condominium associations, and cooperatives.
5
Qualifying Language in Estoppel Letters
Some mortgage servicers and lenders, when sending the estoppel letter required under 701.04(2),
F.S., include language which seeks to reserve that servicer’s or lender’s right to change the
amounts listed in the payoff letter or disclaiming the reliance of others on the information in the
payoff letter. Examples of such language include:
“The payoff figures provided are subject to final verification by the Note Holder. The
noteholder reserves the right to adjust these figures and refuse or accept any funds
which are insufficient to satisfy the full indebtedness for any reason.”
“The payoff amount is subject to our final verification once we receive payoff funds.
… If the payoff funds received are insufficient to pay off the account in full for any
reason including, but not limited to, error in calculation, NSF, or additional escrow
disbursements and/or adjustments. [We] reserve the right to decline to pay the
account in full. In addition, any and all interest will be due at the time of payoff.”
“All payoff figures are subject to final verification of the mortgage lender. We may
adjust any portion of this payoff statement, at any time, for the following reasons,
including but not limited to: escrow disbursements made on behalf of the loan
holder(s), fee advances, items returned by your financial institution including
previously made payments, additional fees or charges, and any good faith and/or
inadvertent clerical errors.”
“We will not be bound by errors and/or omissions contained herein.”
“Agent hereby reserves the right to adjust Payoff Amount or the Per Diem Amount in
the event that we discover a mathematical, typographical, bookkeeping or clerical
error.”
4
Section 701.116(8)(c) states that a condominium association “waives the right to collect any moneys owed in excess of the
amounts specified in the estoppel certificate from any person who in good faith relies upon the estoppel certificate and from
the person's successors and assigns.” 719.108(6)(c), F.S. states that a cooperative association “waives the right to collect any
moneys owed in excess of the amounts specified in the estoppel certificate from any person who in good faith relies upon the
estoppel certificate and from the person's successors and assigns.”
5
But see, Rissman on Behalf of Rissman Inv. Co. v. Kilbourne, 643 So. 2d 1136, 1139 (Fla. 1st DCA 1994), where the 1
st
District Court of Appeal found that a lender could be estopped from claiming additional moneys after an estoppel letter. The
facts of this case, however, were rather unique. As the court mentioned, the mortgagee regularly reaffirmed the amount given
in the estoppel letter over a number of years. In addition, the mortgagor made a number of transactions based in detrimental
reliance on the amount provided by the mortgagee. BILL: CS/SB 1016 Page 4
“Borrower forever releases and discharges Agent, the Lenders, and their respective
officers, directors, employees, agents, representatives, successors and assigns…from
any and all claims, causes of action, damages and liabilities of any nature whatsoever,
known or unknown, which such person ever had, now has or might hereafter have
against [the parties] which relates, directly or indirectly, to any of the Loan
Documents or the Loan.”
6
Such language can frustrate the parties involved in a real estate transaction since, arguably, the
amounts provided in estoppel letters with such language cannot be definitively relied upon. In
the event that the mortgage lender or servicer determines after sending an estoppel letter that the
borrower owes additional money beyond that provided in the estoppel letter, some mortgage
lenders or servicers return all of the funds received from the closing and demand full payment—
even if such funds were sent in reliance on an estoppel letter that was never corrected or revised
by the lender or servicer. This can result in the continued accrual of interest on the full amount of
the mortgage (not just the amount in dispute) during the pendency of resolving the discrepancy
in the amount owed. Further, prior to resolution of the discrepancy, there may not be clear title to
the property.
7
Retroactive Application and the Contracts Clause
Under Florida law, statutes are presumed to operate prospectively, not retroactively. In other
words, statutes generally apply only to actions that occur on or after the effective date of the
legislation, not before the legislation becomes effective. The Florida Supreme Court has noted
that, under the rules of statutory construction, if statutes are to operate retroactively, the
Legislature must clearly express that intent for the statute to be valid.
8
When statutes that are
expressly retroactive have been litigated and appealed, the courts have been asked to determine
whether the statute applies to cases that were pending at the time the statute went into effect. The
conclusion often turns on whether the statute is procedural or substantive.
In a recent Florida Supreme Court case, the Court acknowledged that “[t]he distinction between
substantive and procedural law is neither simple nor certain.”
9
The Court further acknowledged
that their previous pronouncements regarding the retroactivity of procedural laws have been less
than precise and have been unclear.
10
Courts, however, have invalidated the retroactive application of a statute if the statute impairs
vested rights, creates new obligations, or imposes new penalties.
11
Still, in other cases, the courts
have permitted statutes to be applied retroactively if they do not create new, or take away, vested
rights, but only operate to further a remedy or confirm rights that already exist.
12
6
See Email from Melissa Murphy, Executive Vice President, Chief Legal Officer & General Counsel, The Fund (Feb. 4,
2022, 11:46 EST) (on file with the Senate Banking and Insurance Committee), which provided samples of escrow letters that
were sent to Florida borrowers.
7
Id.
8
Walker & LaBerge, Inc., v. Halligan, 344 So. 2d 239 (Fla. 1977).
9
Love v. State, 286 So. 3d 177, 183 (Fla. 2019) quoting Caple v. Tuttle’s Design-Build, Inc., 753 So. 2d 49, 53 (Fla. 2000).
10
Love, supra note Error! Bookmark not defined. at 184.
11
R.A.M. of South Florida, Inc. v. WCI Communities, Inc., 869 So. 2d 1210 (Fla 2004).
12
Ziccardi v. Strother, 570 So. 2d 1319 (Fla. 1990). BILL: CS/SB 1016 Page 5
Florida’s contracts clause states that “no bill of attainder, ex post facto law or law impairing the
obligation of contracts shall be passed.”
13
Regarding the impairment of an existing contract by
the retroactive application of a statute, the Supreme Court, in Pomponio v. Claridge of Pompano
Condo., Inc., 378 So. 2d 774, 780 (Fla. 1979) stated that it is a “well-accepted principle that
virtually no degree of contract impairment is tolerable.” However, the Pomponio court did state
that such a principle does allow for some impairment. In determining the degree to which such
impairment is tolerable, the court weighed “the degree to which a party's contract rights are
statutorily impaired against both the source of authority under which the state purports to alter
the contractual relationship and the evil which it seeks to remedy.” Essentially, the court
established a balancing test asking “whether the nature and extent of the impairment is
constitutionally tolerable in light of the importance of the state's objective, or whether it
unreasonably intrudes into the parties' bargain to a degree greater than is necessary to achieve
that objective.”
III. Effect of Proposed Changes:
Section 1 of the bill substantially amends s. 701.04, F.S., in regards to estoppel letters and the
satisfaction of mortgages. Specifically, the bill:
Reduces from 14 days to 10 days the amount of time a mortgagee or mortgage
servicer has to send, or cause to be sent, a requested estoppel letter setting forth the
unpaid balance of the mortgage loan;
14
Requires that if the estoppel letter request is sent by a person other than the
mortgagor, the request must include a copy of the instrument showing such person’s
title in the property or other lawful authorization, and the mortgagee or mortgage
servicer must notify the mortgagor of the request ; and
Specifies that the mortgagee or mortgage servicer must send the estoppel letter by
first-class mail; by common carrier delivery service; or by e-mail, facsimile, or other
electronic means, as directed in the written request, or through an automated system
provided by the mortgagee or mortgage servicer for this purpose. However, the
mortgagee or mortgage servicer is not required to pay for a common carrier delivery
service.
For an estoppel request to be valid under the bill, a written request from an estoppel letter must
be sent to the mortgagee or mortgage servicer, servicer by first-class mail, postage prepaid; by
common carrier delivery service; or by e-mail, facsimile, or other electronic means at the address
made available by the mortgagee or mortgage servicer for such purpose or through an automated
system provided by the mortgagee or mortgage servicer for requesting an estoppel letter. The
mortgagee or mortgage servicer is deemed to have received said request:
Five business days after the request sent by first-class mail is deposited with the
United States Postal Service;
The day the request is delivered by a common carrier delivery service; or
13
Art. I, s. 10, Fla. Const.
14
If the 10th day after receipt of a written request is a Saturday, Sunday, or legal holiday, the estoppel letter would be
considered timely if sent on the next business day. BILL: CS/SB 1016 Page 6
The day the request is sent by e-mail, facsimile, or other electronic means or through
an automated system provided by the mortgagee or mortgage servicer for requesting
an estoppel letter.
15
The bill also creates a standard specifying the minimum information that must be included in an
estoppel letter (regardless of which party made the request). Such letters must include:
The unpaid balance secured by the mortgage as of the date specified in the estoppel
letter, including an itemization of the principal, interest, and any other charges
comprising the unpaid balance; and
Interest accruing on a per-day basis for the unpaid balance, if applicable.
In addition, the bill – except for those mortgages for which a notice of lis pendens in a
foreclosure action or a suggestion of bankruptcy has been properly filed and recorded – prohibits
mortgagees and mortgage servicers from qualifying, reserving the right to change, or
conditioning or disclaiming the reliance of others on the information provided in said estoppel
letter.
16
However, the bill does allow for mortgagees or servicers of mortgages to send corrected
estoppel letters in the event that they determine that a previous letter that was sent was
inaccurate. In such case, if the person who requested the original letter receives a corrected letter
by 3 p.m. in such person’s time zone, at least 1 business day before a payment is issued in
reliance on the previous estoppel letter, the corrected estoppel letter supersedes all prior estoppel
letters.
If any of the required information in the estoppel letter is inaccurate, and is not corrected as
provided above, the mortgagee or mortgage servicer may not deny the accuracy of such
information as against any person who relied on it. In addition, such mortgagee or servicer of the
mortgage may not return or refuse to accept any funds received in response to an estoppel letter
if such funds were received in the location and manner specified in such letter. Further, such
mortgagee or servicer must promptly apply such funds to the unpaid balance of the loan properly
due under or secured by the mortgage. The bill specifies that the prohibition against a mortgagee
denying the accuracy of information in an inaccurate, uncorrected estoppel letter does not,
however, affect the right of a mortgagee to recover any sum that it did not include in an estoppel
letter from any person liable for payment of the loan or other obligations secured by the
mortgage, nor does it limit any claim or defense to recovery that such person may have at law or
in equity.
The also bill requires that, within 60 days after the unpaid balance of a loan secured by a
mortgage has been fully paid or paid pursuant to the last effective estoppel letter, whichever is
earlier, the mortgagee or mortgage servicer must execute in writing an instrument
acknowledging satisfaction of the mortgage and have the instrument acknowledged, or proven,
have the instrument acknowledged, or proven, and send it or cause it to be sent for recording in
the official records of the proper county; and send or cause to be sent the recorded release to the
mortgagor or record title owner of the property. For civil actions seeking to enforce these
satisfaction and recording requirements, the prevailing party is entitled to recover reasonable
15
If any of these days falls upon on a Saturday, Sunday, or legal holiday, the request for an estoppel letter is considered
timely received by the mortgagee or mortgage servicer on the next business day.
16
Any attempt to do so is void and unenforceable under the provisions of the bill. BILL: CS/SB 1016 Page 7
attorney fees and costs. Such recording, however, does not relieve the mortgagor, or the
mortgagor’s successors or assigns, from any personal liability on the loan or other obligations
secured by the mortgage.
17
Finally, the section makes conforming changes to provisions involving the cancellation of liens
and judgments under the section.
Section 2 of the bill revises the definition of an “estoppel letter” to be a statement containing, at
minimum, the information required for estoppel letters under proposed s. 701.04(1)(b), F.S., and
makes a technical change.
Section 3 of the bill is a statement of retroactive application providing that applying the
requirements of Sections 1 and 2 to existing mortgage contracts achieves an important state
interest.
Section 4 provides an effective date of October 1, 2022, and also states that the provisions of the
bill apply to all mortgages existing as of that date and entered into on or after that date, as well as
to all loans secured by such mortgages.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
Sections 3 and 4 of the bill provide for retroactive application of Section 1 and 2’s
provisions to existing mortgage contracts. Though the bill does clearly state the
Legislature’s intention that the bill’s provisions be retroactively applied, and gives the
justifications for doing so, it is unclear whether such justifications would satisfy the
balancing test adopted by the Florida Supreme Court in Pomponio.
17
Essentially, what the proposed provisions of the bill allow, is that if the lender later determines that additional funds are
due from the borrower (over and above what was in the last-effective estoppel letter), the lender must release the mortgage;
however, the lender will still have an unsecured debt that they can attempt to collect from the borrower or their successors or
assigns. BILL: CS/SB 1016 Page 8
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill will likely lead to fewer irregularities in real estate closings since the bill creates
additional incentive for the mortgagee or mortgage servicer to provide accurate
information in estoppel letters. In regards to consumers, the bill will prevent the accrual
of interest and potential fees while the mortgagee or mortgage servicer and the mortgagor
work through any dispute regarding funds due to the mortgagee or mortgage servicer
over and above that provided in the estoppel letter. The bill will also likely reduce issues
with titles during the pendency of such disputes by requiring the mortgagee or mortgage
servicer to deem such mortgage satisfied.
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
Proposed s. 701.04(2)(b), F.S., authorizes a lender, under certain conditions and after the
satisfaction of a mortgage, to seek recovery of a shortfall from the mortgagor, or the mortgagor’s
successors or assigns. However, if the mortgage has been satisfied, it is unclear who the
mortgagor’s assigns would be, at least in regards to the property subject to the satisfied
mortgage.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends sections 701.04 and 701.041 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Banking and Insurance on February 8, 2022:
The committee substitute:
Clarifies that a mortgage servicer may send the estoppel letter required by s. 701.04, F.S.
Requires the mortgagee or mortgage servicer to notify a mortgagor of an estoppel letter
request when such request is not made by the mortgagor.
Revises the information that must be included in an estoppel letter. BILL: CS/SB 1016 Page 9
Excepts mortgages for which a notice of lis pendens in a foreclosure action or a
suggestion of bankruptcy has been properly filed and recorded, from a prohibition that a
mortgagee or mortgage servicer may not qualify, reserve the right to change, or condition
or disclaim the reliance of others on an estoppel letter said mortgagee or mortgagor has
sent.
Revises certain rights and defenses of parties relating to estoppel letters.
Revises the timeframe by which a corrected estoppel letter may be received by the
mortgagor in order for such correction to be effective.
Revises the requirements of the provision in the bill which specify that a mortgagee or
mortgage servicer must accept a payment made in compliance with an effective estoppel
letter and must apply such payment to the balance of the mortgage.
Revises the requirements for sending a request for an estoppel letter and when such letter
has is deemed received.
Revises how, and the deadline for when, an estoppel letter is sent by a mortgagee or
mortgage servicer.
Clarifies recording requirements for satisfaction of mortgages.
Revises an attorney fee provision to make it only apply to actions regarding mortgages
instead of mortgages, liens, and judgments.
Revises the definition of “estoppel letter.”
Makes technical changes..
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.